My September 19 blog was about the VW fraud in the USA. I wrote: “Actually, I would be very surprised if this fraud would be limited to the USA. And a joint EU and US penalty could seriously hurt this car manufacturer.” Today, 22 September, VW issued a de facto Q3 profit warning after booking a 6.5 billion Euro provision that relates to 11 million cars worldwide. (NYT)
However, this VW/Audi accrual only amounts to Euro 590 per car. The NYT states that “under the terms of the Clean Air Act, the Justice Department could impose fines of as much as $37,500 for each recalled vehicle, for a possible total penalty of as much as $18 billion”. The VW/Audit accrual may thus be largely understated. Perhaps to prevent panic on the stock markets. Last Monday, the news resulted in a 20% share price plunge for the company. Today it’s another -18% so far.
On September 20, the German government called on other German automakers Monday to clarify whether they had manipulated emissions data from their diesel cars following accusations that Volkswagen had rigged emissions tests in the United States. “We are confronted with a case of massive consumer cheating and environmental damage,” Jochen Flasbarth, Germany’s deputy environment minister, said in a statement. German rivals Daimler and BMW said the accusations made by U.S. authorities against VW did not apply to them, according to Reuters. (Politico)
Actually, the reply by BMW and Mercedes may have been premature. I am still wondering which department at VW/Audi could have authorised this software manipulation. The only department I can come up with is the manufacturing / technology department in order to meet emission demands. In my view, the Sales and Finance departments are unlikely to have authorised this as they are much more aware of the massive consequences of such a fraud. Consequently, top management in Automotive may not even know – yet – about such manipulation with their various brand names.
I suspect that the reputation of various car manufacturers may get a serious dent in the forthcoming months. In my view, it is unlikely that only VW/Audi has adopted this approach to manipulate emission data from diesel cars. And why only diesel??
In November 2014, the US administration announced the largest penalty ever for a violation of the Clean Air Act after the Korean automakers Hyundai and Kia agreed to pay a combined $300 million as part of a settlement for overstating vehicle fuel-economy standards on 1.2 million cars. (NYT)
Yesterday, the Wall Street Journal published that “Apple Inc. is accelerating efforts to build an electric car, designating it internally as a “committed project” and setting a target ship date for 2019, according to people familiar with the matter”. On 14 September, the NYT published “that John Krafcik, an auto industry veteran, would become chief executive of its self-driving car project this month.”
As already mentioned in my blogs of January 26 and March 15, Apple and Google are reshaping the the Automotive industry. Initially, it looked as if Automotive would become the hardware platform for “software” companies like Apple and Google. Today, things are much more serious. The emission scandal at VW/Audi (and others?) may well become the turning point in Automotive history.
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